Textile ministry moots plastic bags for foodgrain & sugar

Accusing the jute/gunny bag manufacturing industry for ‘diversion’, Rs stagnation’ and creating Rs bottlenecks to modernization’, the union textile ministry has recommended use of plastic bags (HDPE/PP) bags replacing jute bags for packing sugar and food grains produced in 2012 – 13.

The Ministry’s observation and recommendation for using plastic bags replacing jute bags will be discussed at an meeting of the Cabinet Committee of Economic Affairs (C.C.E.A) soon.

An additional purchase of 3.5 lakh bales (1 bale = 0.3325 tons) of plastic bags is already billed by the Ministry as exigency. To provide further flexibility to consumers the Ministry has decided to allow a further 30 percent dilution / dereservation in favour of plastic bags.

As per Jute Packaging Mandatory Act, 1987 food grain and sugar produced is reserved and mandatorily packed in jute bags manufactured every year.

The continued protection under JPMA, 1987 and stress on sacking products has resulted in jute mills deliberately diverting capacities from non – sacking products such hessian and CBC to sacking / gunny bags , derailing modernisation schemes like Jute Technology Mission (JTM) and stagnating product profile for short-term interest.

The National Fibre Policy 2011 has already recommended on phasing out of protection and subsidy to jute sector through JPMA, 1987 to make it self – reliant, modern and updated.

The textile ministry in its note said, “Only a negligible portion” of the annual turnover of jute mills goes into purchase of new machines. Such purchase are only meant for increasing sacking capacities.

According to Ministry the jute industry could not match demands in 2011 – 12 for supply of 13 lakh bales or 4.33 lakh tons of gunny bags for Rabi supply of 2012 – 13 because of a) inaccurate preseason estimation of crop by Madhya Pradesh govt, b) late placement of indents c) new indentors like Bihar and Gujarat and d) Rs dedicating’ or diverting government products to market for higher prices e) opening of new export markets.

According to Ministry, with 10 mills remaining closed the jute industry is short in capacity by 1.5 lakh ton. Presently, it can produce 11 lakh tons of jute sacks / gunny bags. It’s installed capacity however is 15.02 lakh tons and assuming a 83 percent utilization it’s stated capacity is 12.47 lakh tons. The industry earn a business of around Rs 10,000 crore by selling its entire produce to FCI, sugar mills and co-operatives and in the market.

FCI makes a bulk purchase of almost 35 – 40 % of its produce. In 2012 -13 FCI is expected to purchase 6.34 lakh tons and 4.33 lakh jute/ gunny bags. As per the Ministry’s observation, sugar mills pack only 40% of its production in gunny bags.

The offtake is mostly by government/co-operative sector mills. Sugar industry requires around 3.3lakh tons of gunny bags valued at around Rs 2,500 crore.